Extensible Business Reporting Language (XBRL) and SEC
There is even a movement toward an Extensible Markup Language (XML) standard to promote a global GAAP. The Extensible Business Reporting Language (XBRL) is an attempt to create an internet-based global reporting language. XBRL would permit investors, analysts, and regulators to review and evaluate financial data more easily and efficiently. Because it is an XML standard, tagged data can be automatically searched and analyzed, greatly reducing the chance of errors. Users will need to learn XML-based data tagging concepts and related XML software tools. XBRL gives the promise to enhance the risk and internal controls analysis required in a Committee of Sponsoring Organizations (COSO) framework.
The spotty history of efforts to create industry-specific and process-specific XML standards would suggest that this will be a difficult and long-term effort. The problems have been based more on the inability to standardize business processes than any technical issues.
The SEC is supporting the adoption of XBRL and has released a proposed rule, “XBRL Voluntary Financial Reporting Program on the EDGAR System,”9 accompanied by a “concept release” entitled “Enhancing Commission Filings Through the Use of Tagged Data.”10 The comment periods for the proposed rule and the concept release ended in November 2004, and the SEC is evaluating comment letters and the proposed rule.
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